Fergus O'Dowd (Louth, Fine Gael)
Link to this: Individually | In context | Oireachtas source

139. To ask the Minister for Enterprise, Trade and Employment if his attention has been drawn to significant increases in tariffs for steel products being imported from outside of the EU and the significant effect it will have on steel business going forward (details supplied) given the very serious lack of supply of an alternate EU-based supply; and if he will make a statement on the matter. [38833/21]

Leo Varadkar (Dublin West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

As the Deputy may be aware, the European Union imposed safeguard measures on steel imports into the EU in July 2018 in response to the United States applying a 25% tariff on steel imports originating from 3rd Countries, including the European Union. As a consequence of the US measures, there was an increased risk of steel originally destined for the US market being diverted to the EU market and thereby distorting or severely disturbing the EU steel market. To address this risk, the EU introduced Steel Safeguards Measures in 2018 and these Measures have been continued by decision of the EU last month. The market situation has also been impacted by Brexit with the UK now a 3rd Country since 1 January this year and therefore also subject to the EU's Safeguards Measures. Accordingly, imports from the UK have a Tariff Rate Quota applying under the Safeguards Measures also.

The Measures currently in place allow for the importation of steel from 3rd Countries by way of quotas, determined in line with traditional volumes of trade in steel. The recent decision to continue the Measures for a minimum period of 2 years was based on a Commission-led review of the need for such Measures, undertaken at the request of several Member States, and which was conducted in the first half of 2021. The current Measures will be subject to a full review before 30 June 2023, to determine whether the Measures should be terminated in response to market conditions of trade in steel at that point in time.

Since applying the original Safeguard Measures in 2018, the European Commission has completed 3 reviews of the Measures, with the most recent review published in June 2021. The findings of that most recent review included details on the availability of quotas across the product categories impacted by the Measures. The Commission's review found that during the first three years of application of the Measures (July 2018 – May 2021), there have been consistent and increasing free-of-duty TRQ volumes available at the end of each period in nearly all product categories. For example, in year-3 of the measures up to 20 May 2021, 36% of the available TRQs in steel remained unused, some 11 million tonnes. Thus, the data available indicated that the application of the EU's Safeguard Measures does not affect the availability of supply, as quotas, under which imports do not attract the Safeguard Measures' tariff, are not exhausted before the end of a given period.

However, the Commission has also noted that some 3rd countries continue to demonstrate what it has described as "opportunistic behaviour" and "aggressive export tactics" under which they seek to maximise their market presence under the safeguard measures. This means that, in some extreme circumstances, a 3rd country maximises or exhausts their specific quarterly quota on day-one of the TRQ becoming available (e.g. on I July). This is despite the current Measures being designed to allow for traditional trade flows of steel, and, moreover, being designed to prevent, insofar as is possible, overcrowding the market and pushing out other 3rd country producers that are operating within the parameters of the Measures. At the same time, the Measures are designed to allow EU producers continue to compete in a fair and sustainable manner.

Specifically, in relation to the additional detail provided regarding imports of Category 21 Hollow Sections from Turkey, the Commission Implementing Regulation, brought into effect on 1 July 2021, allocated a country-specific TRQ for Turkey of some 70,000 tonnes of hollow steel for the quarter 1 July 2021 – 30 September 2021. The online TRQ calculator confirms that the full quota was exhausted on 1 July 2021, which supports the Commission position that some 3rd country exporters are applying damaging and aggressive trade tactics in relation to the utilisation of the available TRQ and is relevant to the case of interest to your enquiry.

Furthermore, Turkey was assigned the largest TRQ when compared to the other major exporters of Category 21 Hollow Sections. Comparatively, the next ranked 3rd country, the United Kingdom was assigned a TRQ of 42,000 tonnes for the same period and as of 12 July 2021, there remains a balance of 10,000 tonnes that can be imported from the United Kingdom within the available TRQ. Similarly, North Macedonia was assigned nearly 23,000 tonnes for the same period and there remains some 19,000 tonnes of the TRQ available. My Department’s analysis suggests that of the 7 countries assigned a specific quarterly TRQ, only Turkey and Russia have exhausted their quarterly TRQ already and there remains TRQs available in the other 5 countries with a country specific TRQ and some 64,000 tonnes available within the global quota.

Notwithstanding the general level of availability of TRQs across the system, it is recognised that importers can face significant administrative burdens when trying to source material from 3rd countries where there is a limited commercial relationship between the producer and the importer. In that regard, officials in my Department have routinely raised this concern with Commission officials and will continue to do so on foot of the information that has been included as part of this Parliamentary Question. It is in the interest of our steel importers that they develop strong commercial relationships with a range of 3rd country producers to ensure that they can source their requirements from a diverse range of 3rd country providers.

Moreover, it is important to note that the current Measures in place include a 3% year-on-year liberalisation rate which means that the available TRQs increase each year by 3% from the benchmark period of 2015-2017. Therefore, TRQs for the periods 2021/22 and 2022/23 will reach the import highs recorded in 2018 when the Measures were first introduced, meaning that imports of steel into the EU will have to exceed the import levels of 2018 before the 25% safeguard tariff would apply. In designing the Measures, the European Commission has sought to ensure full compliance with the safeguard rules provided for under the World Trade Organisation and the Commission has reassured Member States that it continues to monitor the situation for both producers, users and importers to limit any negative impact of the application of the Measures.

Finally, officials in my Department continue to engage with Irish industry and representative groups on the matter and liaise closely with EU officials regarding the operation of the safeguard measures to ensure that they continue to meet their objective in guarding EU steel producers from the harmful impact of trade diversion of steel while at the same time ensuring that the EU market stays open to fair and sustainable competition where EU importers can secure supply at competitive prices.

As always, steel sourced within the EU is not subject to any such tariffs as part of the Single Market.